Sears' stock jumps to 4-year high on upbeat earnings estimate

CHICAGO - Shares in Sears, Roebuck and Co. surged 7 percent to a four-year high Wednesday after the retailer reported preliminary first-quarter profits far exceeding Wall Street&#39;s estimates. <br> <br> While describing sales as still &#34;soft,&#34; Sears said estimated operating earnings for the quarter more than doubled from a year ago thanks to improved profit margins and lower operating costs. <br> <br> It pegged earnings, excluding non-comparable items, at 93 cents a share -- up from 45 cents in the first quarter of 2001 and well above analysts&#39; consensus estimate of 61 cents, according to Thomson Financial/First Call. <br> <br> Its complete earnings report will be released April 18. <br> <br> Sears&#39; latest results -- including a 4 percent decline in same-store sales from a year ago -- make clear that the $41 billion-a-year company has yet to shake out of its long retail slump. <br> <br> Net earnings for the quarter will still fall well short of last year&#39;s when all charges are tallied, including $208 million, or 64 cents a share, due to the adoption of new accounting standards, and $40 million for converting Eaton&#39;s stores to Sears Canada stores. Sears&#39; estimated net earnings were 34 cents per share, down 64 percent from 53 cents a share in the first quarter a year ago. <br> <br> In addition, while adding 31 cents a share onto anticipated first-quarter earnings, Sears boosted its full-year earnings estimate by just 14 cents a share over the previous estimate -- suggesting a scaling back for the rest of the year. <br> <br> Investors nonetheless embraced the positive short-term news. <br> <br> Sears&#39; stock jumped $3.57 to $54.77 a share in morning trading on the New York Stock Exchange, its highest on intra-day charts since August 1998. Shares in the Hoffman Estates, Ill.-based company fell as low as $29.90 last September in the aftermath of the terrorist attacks. <br> <br> Chairman and chief executive Alan Lacy said he was particularly pleased with the improved retail earnings, which he said demonstrate the initial success of recent strategic initiatives. <br> <br> &#34;While revenues continue to be soft, our focus on gross margin, inventory levels and operating expenses is driving substantial profit improvement,&#34; he said. <br> <br> The retail and related services segment improved operating earnings by over $140 million from last year, Sears said. The credit and financial products business also enjoyed a strong quarter with an expected earnings increase of about 20 percent. <br> <br> &#34;Sears is in the midst of a turnaround, and their turnaround is far from complete,&#34; said retail industry consultant Kurt Barnard. &#34;But they&#39;re well on their way.&#34; <br> <br> He said Lacy has come to the realization that the traditional department-store model doesn&#39;t work any more, and is &#34;trying to create a shopping-mall alternative to the free-standing discount store and companies like Kohl&#39;s.&#34; <br> <br> ------ <br> <br> On the Net: <br> <br> Sears site: http://www.sears.com <br> <br>

http://accesswdun.com/article/2002/4/196218